Oapdd brief investment plan rev2-construction company

Ontario Auto Parts Distribution Development Ltd.

OAPDD Investment Plan- Construction Company Rev2 Page 1 of 11


Investment Plan (Construction Company)

Date: January 4th

, 2013



1 Executive Summary

OAPDD intends to develop, construct and manage auto parts distribution c entre and OAPDD will

set up the parts distribution center in the Waterloo Region to help the local parts suppliers and

auto service shops in the aftermarket industry. Through our innovative distribution platform, the

auto parts manufactured by ON 300 plus local parts manufactures will be demonstrated and

delivered to the end consumers or auto service shops timely, efficiently and effectively, which will

result in more business and add competition/sales powers to the parts manufactures.

2 OAPDD Structure and Investments

The materials provided in the following sections are in an intention to set out the basic

investment structure required to establish and fund the OAPDD Project. The preliminary

proposed structure and investments currently contemplate the following:

(a) Four (4) interested Chinese investors will invest $8 million into a Canadian construction

company (the "Construction Company") which funding will be used to purchase and develop

the site for the OAPDD facility in Waterloo Region.

Funding into the Construction Company is expected to be invested from the Chinese Investment

through Canadian companies (in which Chinese investors will be shareholders) to the

Construction Companies , as applicable.

As the OAPDD business plan is executed upon, it is expected that OAPDD will own approximately

15% of the Construction Company, and the investors will own the balance of the shares. The

management of the Construction Company shall be provided by OAPDD and its management

team and advisors shall consist of software development experts, engineers, accountants, lawyers,

and other professionals. The team has extensive Canadian commercial real estate experience,

software development experience, auto parts distribution experience and also property

management experience, with a strong and well established history in the strategic planning,

management of Property Management and private placement financing.

As consideration for the organization and development of the Corporation and the Projects,

OAPDD, shall be entitled to a Development Fee which is the greater of $150,000 Cdn, or 4 % of

the total project development cost (complete turnkey cost from initial development to final



delivery) with the minimum amount of $ 150,000 Cdn payable upon Commencement of the

project. The balance if any, shall be payable after completion of the construction cost Audit.

Furthermore, the parties agree that OAPDD shall be entitled to retain all one-time commissions,

fees, grants, or other form of incentives of any kind, granted at the construction stage of each

project. This fee does not include any fees due to third parties, such as commissions, etc. that are

traditionally paid in transactions of this nature, which are not paid by the Developer. For further

clarification, the Development Fee is to reimburse the Developer for all out of pocket costs

incurred in the organization/development of the Project including but not limited to; architectural,

mechanical and structural designs and plans, city and construction permits, professional fees, etc.

Mann Engineering Ltd. (www.mannengineering.com) will be the consulting/construction

company acting as a general contractor to manage the design of the auto parts centre and

generally to manage the construction process of the project until final delivery to OAPDD. A

tender process will be used by Mann Engineering for sub-contractors (including the architectural

firm), as is customary in the industry.

3 Our Objectives;

1. Set up the largest auto parts distributing center in Canada and the largest research and design

center for auto parts manufacturers.

2. Demonstrate and sell auto parts from many manufacturers in one location to provide

consumers with maximum service in a minimum area by using advanced technologies as follows,

3D display sales terminals developed and maintained by DDD.

cloud computing

Radio-frequency identification (RFID) smart warehouse management developed and

maintained by DDD.

cell phone scan for order tracking and genuine part verification

4 Return on the Construction Company, and expansion plan

Estimated to start from less than 5% for the first year and reach 8% after the first year.

There are other phases to be expanded upon the successful development and operation on these

first two companies.

5 Market Analysis Summary

OAPDD will be participating in an exciting, growing market. Auto aftermarket service has seen

explosive growth in the Canada in the last decade.

http://www.mannengineering.com/

http://en.wikipedia.org/wiki/Radio-frequency_identification



Highlights are as follows:

The aftermarket is now estimated to be worth $19.4 billion and employs 420,000

Canadians representing 50% of all employment in the automotive industry.

54% of all vehicles registered in Canada are now over the age of 8 years with the average

age of a vehicle on Canadian roads now standing at 8.54 years.

There were 22.2 million vehicles registered in 2011 with total annual vehicle kilometers

driven measured at 469.8 billion kilometers or an average of 21,995 kilometers per

vehicle.

Used vehicle sales represented 65.6% of all vehicles sold in Canada in 2011.

The average mileage recorded on a retired vehicle is now estimated at 320,000

kilometers.

Ontario is home to five of the world's top automakers, as well as 300+ innovative parts

manufacturers. Our industry employs 88,000 highly skilled workers who produced 2.1+ million

vehicles in 2011 – more than any other North American sub-national jurisdiction.

Canada has been losing market share globally due to having virtually no export markets beyond

the US. According to a report from Scotia Economics, in recent years, Canadian auto part makers

have failed to diversify their business which has caused them to fall out of the list of the top 10

global exporters in the sector. Since there is less demand for auto parts for local and North

American market, the price for the auto parts also goes down. Being able to demonstrate or sell

the ON made auto parts locally and also to other territories are essential to sustain the ON auto

parts manufacturing business.

6 Distribution Patterns/ System Overview

Smart warehousing technology-high efficiency, accurate

3D sale terminal

By 8 AM Delivery and worldwide

With our shipping alliance-Ebox, a by 8 AM system will deliver huge customer benefits of

Unattended Nighttime Delivery.

Inventory visibility

Smart phone trace

7 Conclusion

We are confident that the arrangement mentioned above will establish the Auto Parts



Distribution Centre in a timely no-risk manner. This will enable us to swiftly move through the

various stages in tandem and should demonstrate the desired results in an effective and efficient

manner to help the ON auto parts manufacturers, auto service shops in the aftermarket industry

and the end users as well.

Steve Xing, VP of Business Development


Address: 23 Chase Crescent Cambridge

ON, Canada, N3C 0C5

Tel: 01-519-496-3078

Fax: 01-519-658-2179

Ontario Auto Parts Distribution Centre Inc.


Appendix A Software Development Major Milestone

Projected

Cost$

0-3 MonthSecure a industrial zoned land with a size of

15 to 20 acres

- Look into details on the real estate website

-Meet with multiple real estate agents and

engage a buyer agent

- Lock up a land for development

0-12 MonthAssist in land purchasing, review the zoning

with the city

-Site Plan Application and Building Permit

Application

-Detailed site plan, architechtural and

engineering designing

- Apply for site plan

- Apply for building permit

- Obtain approval on obth SPA and BP

13- 19 Month Construction Works

- Prepare RFQ for various trades

-Award construction works to the winner

contractors

- Start Construction Works

- Finish up the building construction

-Complete the interior works and purchase

furnitures and required equipement

20 to 24 MonthRelocate from the rental office to the new

built head office

- Set up the software and servers

-Set up warehouse demonstration and

storage area to start the distribution

-

-

Total Capital $ $7,624,250

$2,436,000

$831,450

$4,250,000

$106,800

Auto Parts Distrition Centre Development Major Milestone



Appendix B Auto Parts Centre Development 1-12 Months Cost

Description Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Salaries $20,000 $20,000 $20,000 $38,000 $38,000 $38,000 $46,000 $46,000 $46,000 $46,000 $46,000 $58,000

Office Rent+Utilities $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500

Professional Fees $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000

Telephone $150 $150 $150 $200 $200 $200 $350 $350 $350 $400 $400 $400

Equipement (Fixed Asset) $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000

Supplies $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000

Travel $5,000 $5,000 $5,000 $5,000 $5,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000

Meals & Entertainment $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000

Postage & Delivery $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200

Dues & Subscriptions $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200

Printing/Documentation $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400

Allocated Expense

Sum $36,450 $36,450 $36,450 $54,500 $54,500 $59,500 $67,650 $67,650 $67,650 $67,700 $67,700 $79,700

Headcount

Employees Project Manager 1 1 1 1 1 1 2 2 2 2 2 2

Employees Project Engineer 1 1 1 2 2 2 2 2 2 2 2 2

Employees Project Coordinator 1 1 1 2 2 2 2 2 2 2 2 2

Employees Office assistant 0 0 0 1 1 1 1 1 1 1 1 1

Employees Field project manager 0 0 0 0 0 0 0 0 0 0 0 1

Employees Field safety officer 0 0 0 0 0 0 0 0 0 0 0 1

Employees Field security guard 0 0 0 0 0 0 0 0 0 0 0 0

3 3 3 6 6 6 7 7 7 7 7 9

3 3 3 5 5 5 6 6 6 6 6 6

Operations 0 0 0 1 1 1 1 1 1 1 1 1

Field staff 0 0 0 0 0 0 0 0 0 0 0 2

3 3 3 6 6 6 7 7 7 7 7 9

Employees

Manager Sal=$ 8000 per month 8000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $16,000 $16,000 $16,000 $16,000 $16,000 $16,000

Engineers Sal=$ 6000 per month 6000 $12,000 $12,000 $12,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000

Operations Sal=$ 6000 per month 6000 $0 $0 $0 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000

Field staff Sal=$ 3000 per month 6000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $12,000

Secutiry guard Sal=$ 6000 per month 3000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

$20,000 $20,000 $20,000 $38,000 $38,000 $38,000 $46,000 $46,000 $46,000 $46,000 $46,000 $58,000

Auto Parts Centre Development 1st 24 Monthsn Cost

Headcount by Department

Project management



Appendix C Auto Parts Centre Development 13-24 Month Cost

Description Month 13 Month 14 Month 15 Month 16 Month 17 Month 18 Month 19 Month 20 Month 21 Month 22 Month 23 Month 24

Salaries $67,000 $67,000 $67,000 $67,000 $67,000 $70,000 $70,000 $70,000 $70,000 $70,000 $70,000 $70,000

Office Rent+Utilities $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500

Professional Fees $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000

Telephone $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800


Supplies $1,001 $1,002 $1,003 $1,004 $1,005 $1,006 $1,007 $1,008 $1,009 $1,010 $1,011 $1,012

Travel $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000

Meals & Entertainment $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000

Postage & Delivery $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400

Dues & Subscriptions $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400

Printing/Documentation $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800

Allocated Expense

Sum $90,901 $90,902 $90,903 $90,904 $90,905 $93,906 $93,907 $93,908 $93,909 $93,910 $93,911 $93,912

Headcount

Employees Project Manager 2 2 2 2 2 2 2 2 2 2 2 2

Employees Project Engineer 2 2 2 2 2 2 2 2 2 2 2 2

Employees Project Coordinator 2 2 2 2 2 2 2 2 2 2 2 2

Employees Office assistant 1 1 1 1 1 1 1 1 1 1 1 1

Employees Field project manager 1 1 1 1 1 1 1 1 1 1 1 1

Employees Field safety officer 1 1 1 1 1 1 1 1 1 1 1 1

Employees Field security guard 3 3 3 3 3 4 4 4 4 4 4 4

12 12 12 12 12 13 13 13 13 13 13 13

6 6 6 6 6 6 6 6 6 6 6 6

Operations 1 1 1 1 1 1 1 1 1 1 1 1

Field staff 5 5 5 5 5 6 6 6 6 6 6 6

12 12 12 12 12 13 13 13 13 13 13 13

Employees

Manager Sal=$ 8000 per month $16,000 $16,000 $16,000 $16,000 $16,000 $16,000 $16,000 $16,000 $16,000 $16,000 $16,000 $16,000

Engineers Sal=$ 6000 per month $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000

Operations Sal=$ 6000 per month $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000

Field staff Sal=$ 3000 per month $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000

Secutiry guard Sal=$ 6000 per month $9,000 $9,000 $9,000 $9,000 $9,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000

$67,000 $67,000 $67,000 $67,000 $67,000 $70,000 $70,000 $70,000 $70,000 $70,000 $70,000 $70,000

Auto Parts Centre Development 1st 24

Months Cost


Project management



Appendix D Auto Parts Distribution 12 Months Operation Cost

Description Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 126 month

subtotal1 year subtotal

Salaries $52,000 $52,000 $52,000 $52,000 $52,000 $52,000 $52,000 $52,000 $52,000 $52,000 $52,000 $52,000 $312,000 $624,000

Office Utilities $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $4,500 $27,000 $54,000

Recruiting $12,000 $0 $0 $0 $0 $12,000 $0 $0 $0 $0 $0 $0 $24,000 $24,000

Professional Fees $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $6,000 $12,000

Telephone $150 $150 $150 $200 $200 $200 $350 $350 $350 $400 $400 $400 $1,050 $3,300


Supplies $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $6,000 $12,000

Travel $5,000 $5,000 $5,000 $5,000 $5,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $35,000 $95,000

Leasehold improvement $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $90,000 $180,000

Insurance $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $72,000 $144,000

Meals & Entertainment $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $3,000 $6,000

Postage & Delivery $0 $0

Dues & Subscriptions $0 $0

Printing $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $3,000 $6,000

Documentation $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $3,000 $6,000

Allocated

Expense/equipment

maintenance and others

$2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $12,000 $24,000

Sum $131,750 $97,750 $97,750 $97,800 $97,800 $114,800 $102,950 $102,950 $102,950 $103,000 $103,000 $103,000 $637,650 $1,255,500

Headcount

Employees Manager 2 2 2 2 2 2 2 2 2 2 2 2

Employees Sales/Marketing 3 3 3 3 3 3 3 3 3 3 3 3

EmployeesAssistant/office

staff/book keeping2 2 2 2 2 2 2 2 2 2 2 2

Employees Accountant 1 1 1 1 1 1 1 1 1 1 1 1

Employees Logistics 2 2 2 2 2 2 2 2 2 2 2 2

Employees Facility Manager 1 1 1 1 1 1 1 1 1 1 1 1

Assistant facility manager 1 1 1 1 1 1 1 1 1 1 1 1

12 12 12 12 12 12 12 12 12 12 12 12

3 3 3 3 3 3 3 3 3 3 3 3

Operations 7 7 7 7 7 7 7 7 7 7 7 7

Facility

management2 2 2 2 2 2 2 2 2 2 2 2

12 12 12 12 12 12 12 12 12 12 12 12


Sales/Marketing

Auto Parts Distribution 12 Months Operation Cost



Appendix E Auto Centre Development Estimated Cost

Estimated Total GFA for

Auto Centre 150,000 sft

CityDevelopment

Fees $

Building

Permit Fees

Engineering

Package $

Contigencies

$Total $

Cambridge $273,000.0 $0.0 $450,000.0 $108,450.3 $831,450.3

Estimated Land Cost $2,400,000

Land Transfer Taxes 1.50%

Land Transfer $ $36,000

Total $3,267,450.27

The zoning will be industrial zone and building permit is normally 4 to 6 weeks but Site Plan Application

takes about 6 months.

Auto Centre Development Estimated Cost

Appendix F Project Development Phases and Estimated Cost

Total Phases 6

Items Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Phase 6

GFA sq.ft 25,000 25,000 25,000 25,000 25,000 25,000

Construction Cost

and other expenses $$4,250,000 $4,250,000 $4,250,000 $4,250,000 $4,250,000 $4,250,000

Time line 13 to 20 month To be determined based on the economy on phase 1.

Project Development Phases and Estimated CostThe auto center will be develped into a 150,000sq.ft building in phase.



Appendix G Pro-Forma Income Statement

Inflation rate 3%

Estimated leasees a year 25

Management fee and sales

revenue annual increase rate 5%

Annual management

fee/leasee$20,000

Average parts sales a year

per leasee$250,000

Gross margin from selling

parts taken by DC25%

Space annual lease fee $/sft $25

REVENUE 1st Year 2nd Year 3rd Year 4th Year 5th Year

Rental income $625,000 $643,750 $663,063 $682,954 $703,443

Management/Membership fee $250,000 $500,000 $525,000 $551,250 $578,813

Parts sales revenue $1,562,500 $1,640,625 $1,722,656 $1,808,789 $1,899,229

Gross Revenue $2,437,500 $2,784,375 $2,910,719 $3,042,993 $3,181,484

OPERATING EXPENSES

Others as listed in Auto Parts Distribution 12

Months Operation Cost $1,255,500 $1,293,165 $1,331,960 $1,371,919 $1,413,076

Software cost and maintenace paid to

Software Development Company $583,333 $600,833 $618,858 $637,424 $656,547

Total Operating Expenses $1,838,833 $1,893,998 $1,950,818 $2,009,343 $2,069,623

EBITA $598,667 $890,377 $959,900 $1,033,651 $1,111,861

Investment $7,624,250

ROI 7.85% 11.68% 12.59% 13.56% 14.58%

Pro-Forma Income Statement

Auto Distribution CentreFor 2014 through 2018

After 20 months Development